What is Grayscale?Grayscale is the company that created the ETHE product. Their website is https://grayscale.co/
What is ETHE?ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor.
How does Grayscale acquire the ETH to collateralize the ETHE product?An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there.
Can ETHE be redeemed for ETH?No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself.
Why are they not redeeming shares?I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset.
What is the ratio of ETH to ETHE?At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC.
Why is the ratio not 1:1? Why is it always decreasing?While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC.
I keep hearing about how this is locked supply… explain?As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good.
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.)
Yes, but what about [insert criminal act here]…Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015.
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
Are there any other differences between ETHE and GBTC?I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing.
Is Grayscale only just for BTC and ETH?No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund.
Are there alternatives to Grayscale?I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know.
Coinshares (Formerly XBT provider) are the only similar product I know of. BTC, ETH, XRP and LTC as Exchange Traded Notes (ETN).
It looks like they are fully backed with the underlying crypto (no premium).
Denominated in SEK and EUR. Certainly available in some UK pensions (SIPP).
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
…a smart contract deflationary token within a portfolio of selective coins/token built on the Ethereum blockchain.submitted by ghosthunter_01 to ethtrader [link] [comments]
BLOCKCHAIN TECHNOLOGY IS CHANGING, DEFI IS EVOLVING! Blockchain technology is changing the World forever, over the past decade, the introduction of blockchain technology to the world and especially the world finance system has proven how convenient and secured the World's finance system can be. Blockchain has proven its' worth to be an essential tool in the world finance system. Varying from a different mode of transaction to the flexible usage of it.
The Ethereum blockchain has played and still playing a significant role in Blockchain finance evolution. With over a hundred projects out there, each aiming and claiming to solve the problem of financing system in the world, Decentralized Finance DeFi has proven to play an essential role in this regard.
Deflationary Projects arise amidst the flow of developers developing ways of making a project unique and scarce through constant reduction of total supply during a transaction. Over the past few years, many projects attempted this approach, however, they failed to achieve this goal as a result of the unsustainability of the project, or the utter intent of some of the developers to scam people of their money. Nevertheless, previous deflationary cryptocurrency attempts have proven the fact that this method alone will not make a project unique or scarce. Hence, a few projects attempted to apply other interesting features to their deflationary projects, some of which are discussed briefly below.
Through a constant reduction of total supply as a result of a certain percentage of each token transaction sent to 0x address, a deflationary project aims to reduce its total supply to make it scarce, thus increasing the demand and value of the project.
The first project to start this on-chain action was BOMB token. With every transaction on BOMB, 1% of the supply is sent to 0xaddress and lost forever, this is known as BURN. Unfortunately, this didn't work for a long time as anticipated, turns out it takes a project more than just that to make it demanding. In light of this, a few other deflationary projects decided to add extra features to its deflationary attribute.
A good example of this is another deflationary project called Shuffle Token (SHUF) burn 1% on every transaction, and randomly send another 1% to any of the top 512 holding addresses, this second feature is known as Heap.
The third example of a deflationary project with an extra feature is BitcoinSov (BSoV). This deflationary project also has a 1% burn, but its extra feature is mining. This is the only mineable deflationary project in existence as of today.
The last example is Ruletka (RTK). Ruletka is an experimental ERC20 token, it was developed in the small town of Alatyr in Russia. When a transaction is made using RTK a number is chosen between 1 and 6. If 6 is chosen, the coins in the transaction will be sent to the 0x address and burned. It was developed based on the legend Russian Roulette life gambling game.
Regardless, deflationary projects are yet to receive the world's attention as most of them struggles to be sustainable.
For the past two years, Decentralized Finance or DeFi has been undergoing a series of changes and development. DeFi is aimed at providing solutions to the challenges being faced by traditional financial systems using Etherium blockchain as its primary station.
What is Index Fund?
Investopedia.com described index funds as a type of mutual fund with a portfolio constructed to match or track the components of a financial market index, providing broad market exposure with low operating expenses and low portfolio turnover.
A hypothetical portfolio of investment holdings representing a segment of the financial market. The calculation of the index value comes from the prices of the underlying holdings. Investopedia. 2017 was a significant year for crypto, however, was succeeded by the extended bear market. The long bear market made it difficult for investors to select which market they are to invest in. since the rise of the crypto market, it has been experiencing a series of ups and downs, making it difficult, especially for retail investors to select the market they are to invest in. the idea of index market in the blockchain industry is something not usually mentioned, while most investors preferred to long or short on BTC or other Alts.
CRYPTOCURRENCY INDEX FUND
Late 2019 and early 2020, cryptocurrency index funds are becoming an item of discussion and interest in the cryptocurrency investment world. A cryptocurrency index fund prevents an investor from the stress of constant or active management of their crypto fund portfolio.
They help spread risks by diversifying an investment across a broad selection of coins, protected from the crypto market volatility. This means your fund is being handled for you, which of course necessitates a form fee. While fees vary from one index fund manager to the other, the differences in fees don't guarantee the performance of one manager over the other. Among the popular cryptocurrency index funds that are currently available on the market as of 2020 includes:
The idea behind an indexed deflationary token is to keep cutting the circulating supply on a transaction basis, coupled with an investment in diverse selective coins on the Ethereum blockchain market.
Using balancer, the idea is to have a deflationary token inside a pool with other assets for example; USDC, ENJ, LINK, KNC, etc. along with the deflationary token itself, all of which are in one pool. When the token is bought, it will automatically re-balance into other sets in the pool, increasing the trade volume and at the same time burning. A mix of index/portfolio token with a deflationary token.
Statera, in Latin, means Balance. STA is a smart contract deflationary token within a portfolio of selective coins/token built on the Ethereum blockchain. The index portfolio includes four Volatile markets and three Stable markets; ETH, MKR, SNX, LINK, DAI, SUSD, DZAR. Leaving STA with 70% volatility and 30% stability. STA is built on a smart contract, holding all the funds including STA itself.
When STA is purchased with ETH, ETH is spread into the weight in the portfolio and STA purchased gets removed from the index amount. The index suit is not fixed, i.e. the coins in the portfolio can be easily replaced should in case the market demand for a change.
The index also charges a fee. Every time a trade is executed through it (not a purchase of STA this time around, but swapping DAI for ETH for example), 1% stays behind and is shared between the portfolio. With the deflationary attribute of STA, the more trades that occur, the more valuable it becomes. The idea is that a price difference will lead to auto-balancing, which means burning. There you have it, An Index-Deflationary Token.
STATERA [STA] TOKEN INFORMATION
Total Supply: 100, 000, 000.
Burn rate: 1% on each transaction.
Website: Coming Soon.
Community: Telegram Twitter
Contract address: Etherscan
Portfolio address: Zerion
Current exchange: 1inch Exchange